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If you have recently decided to move from renter to homeowner, you are not alone. First-time homebuyers made up 41 percent of the market, according the National Association of REALTORS®’ 2008 Profile of Home Buyers and Sellers. And price declines in many markets around the country have created unique opportunities for those considering home ownership for the first time.

As a homeowner, you have security and stability, the freedom to decorate and remodel, potential to build equity and tax benefits. And with interest rates still at historically low levels – 5.22% for the typical, 30-year fixed-rate mortgage (as of early August 2009), combined with ample inventory, now is a great time to buy.
Plus, there are several incentives and programs available specifically for first-time homebuyers.

First-Time Homebuyer Credit
One program that is a great financial opportunity is the highly publicized First-time Homebuyer Credit, which was part of the Housing and Economic Recovery Act of 2008. This federal initiative allows first-time homebuyers to take up to an $8,000 tax credit, which doesn’t have to be repaid, toward a new or resale property purchased prior to Dec. 1, 2009. For new construction, the purchase date is considered to be the date you first occupy the home.

Under this program, a first-time homebuyer is considered to be anyone who has not owned a principal home within the last three years. If you are married, both spouses must meet this criterion. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer. In addition, ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer. You are also eligible to claim first-time buyer status if you owned a principal residence outside of the United States within the last three years.

The actual tax credit may vary depending on the purchase price and your income. The credit is generally equal to 10 percent of the home’s purchase price, not to exceed $8,000. In addition, the income limit to receive full credit is $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return.

For complete details, visit www.irs.gov and www.federalhousingtaxcredit.com. As always, consult with your tax adviser on how this tax credit may affect you.

State Programs
Many states also have first-time homeowner programs. Under these programs, first-time homebuyers may be eligible for grants for down payments and closing costs. Some states even offer various tax deductions and credits.

Mortgage Loans
As a first-time homebuyer, you don’t have the advantage of using the equity in a previous property to help bridge costs associated with down payment, closing and other fees. Many financial institutions have mortgage products with you in mind. In addition, the Federal Housing Administration (FHA) offers mortgage programs in which your down payment can be as low as 3.5% of the purchase price, and allows most of your closing costs and fees to be included in the loan. Although FHA does not directly loan to consumers, you can work with a FHA-approved lender. For more information, visit www.hud.gov.

Workshops
Besides financial assistance, there are workshops specifically geared toward first-time homebuyers. They provide a wealth of information about the home-buying process, such as how to search for a home, setting up a budget, choosing a real estate professional, loan products, and so on.

The transition from renter to homebuyer is a large step and is arguably one of the largest investments you’ll make, so make sure you take advantage of all the assistance available to make the road to homeownership that much easier.

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I have noticed a trend over the last few weeks/months. When I am on the floor in my office, the phone rings all the time again. It is interested buyers, passers by, and fellow Realtors showing our office’s listings. If I were forced to guess, I would have estimated that sales were up, now it is confirmed.

Another trend I have noticed in the market is the number of expired listings, those that did not sell, is down. I think this is because people have finally come to the realization that their property isn’t worth what it used to be, and they need to price it competitively to sell it. Additionally, “Bank Owned”, those properties being sold in foreclosure by the bank, are being marketed by the banks at rock bottom prices. They are generating multiple offers and actually receiving more than their asking price for the properties. Some are actually investing money in to repairs! That used to be unheard of for bank owneds.

According to the National Association of Realtors (NAR) “The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.

NAR President Charles McMillan says there are numerous buyer assistance programs around the country.

‘Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,’ McMillan says.

Last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger down payment.”

Things are definately looking up in our industry and now is the time to buy at rock bottom prices. “NAR’s Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, which makes it the second-highest monthly reading on record after peaking at 176.9 in January of this year.”

If you are a first time buyer, and investor, or a savvy homeowner looking to upgrade while the gettin’s good, call me right away at 386.837.5300. I am happy to help you with all your Real Estate requirements.

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• As the Foreclosed Move Out, First-Time Buyers Are Moving In (nytimes.com)
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